The Galaxy Note20 Ultra is big, probably very fast, and has Samsung’s most advanced stylus tech ever. Add in the obligatory 5G tax, and everyone knew this was going to be a very, very expensive smartphone: it is wholly unsurprising.
In fact, I am a bit surprised that it doesn’t cost more. The $1400 Galaxy S20 Ultra is in no significant way more capable than the new Note. It actually has a less technologically advanced display (with an older version of Gorilla Glass), lacks the Note20 Ultra’s laser autofocus, comes with a slightly slower chipset, and has an inferior iteration of Samsung’s “Space Zoom” camera. I fully expected the Note20 Ultra would cost more than the S20 Ultra when it launched. That’s not happened: it’s a hundred dollars less.
While I have no way to confirm it, I suspect this wasn’t actually the plan. I think Samsung originally intended to launch the Note20 Ultra at the S20 Ultra’s MSRP or even perhaps a bit higher, in the hopes of convincing fans they were getting $100 more technological advancement. And given the S20 Ultra has rarely gone on discount (it remains $1400 at the time of this writing), Samsung was clearly banking on the idea that its big price hikes would be met with success in the marketplace. But with the ongoing pandemic, that simply hasn’t happened.
I’m not saying Samsung’s timing here is tone-deaf, per se, it’s really that it’s just devastatingly unfortunate.
People who do need to upgrade a phone are almost certainly more price sensitive today than they were a year ago, if not putting off a purchase entirely as a result of the massive economic uncertainty in this country. Many Americans are far more worried about paying their mortgage next month than they are about whether they can afford a fancy new smartphone. I’m not saying Samsung’s timing here is tone-deaf, per se, it’s really that it’s just devastatingly unfortunate. Samsung planned this product well before we even knew COVID-19 existed, let alone by the time it became a global pandemic. To simply not launch the Note20 series wasn’t ever really a serious option, and completely reworking it into something more budget-appropriate wouldn’t be possible in that time frame.
Reality, though, is not so forgiving. I have seen plenty of my respected colleagues present the comical incongruity that is a $1300 smartphone in the middle of a global health and economic crisis. And given what we know about the global economy, the recovery is going to be slow-going, taking place over the course of the next decade. That doesn’t bode well for very expensive phones not just today, but well into the future.
The Galaxy Note20 Ultra will not be the last phone costing $1300 or more. Foldable phones can assure us of that. But when economic disaster strikes, we’re often left looking at certain luxuries we once deemed acceptable as a bit out of touch. And it’s not just the economy, either: phones face an increasingly obvious commoditization trend. The “premium” experience is making its way downmarket. Handsets like the OnePlus Nord and Pixel 4a offer 90% of what top-tier devices do at a fraction of the cost. And unlike the mid-range phones of years past, there really is no big “but” lurking around the corner anymore. High-refresh displays, plentiful storage and RAM, algorithmic photography, fast charging, advanced processors, and even 5G are all rapidly trickling into cheaper and cheaper phones at a time when the smartphone market has reached apparent maturity. These forces, working in parallel, are bound to increase the share of the market that goes to such phones, something analysts like Avi Greengart have been pointing out for months.
Most Americans are now keeping their phones for 3 years or more.
Make no mistake: expensive smartphones will continue to be a thing. And many people will continue to buy them, especially from Apple, the odd tech company out that markets more on brand image and aspirational lifestyle than actual tech. But I expect that, Apple aside, the relevance of those very expensive phones will begin to wane. We’re already seeing this play out, in that most consumers are keeping their phones longer than ever, a sign that the 2-year upgrade cycle hype is dying. In fact, most Americans are now keeping their phones for 3 years or more, which—ironically—has almost certainly driven up the cost of phones as manufacturers attempt to reap back that lost revenue. But that cycle cannot continue—there will be a tipping point, and I think we’ve basically reached it.
Phone makers are now also being forced to up their commitment to keep phones supported, largely in response to Apple. Samsung just announced it will offer three major Android OS updates on its top-tier phones, from the two it has typically provided. Google already provides three years of updates, but Apple provides five or more. Often, it is simply the device physically failing in some way—a broken screen, a busted camera, a dead battery—that forces consumers to upgrade anymore, not “lag” or the desire for some hot new feature. Apple has largely decided it’s fine with this, and that means Apple is winning loyalty from those customers who are highly resistant to upgrading until it’s absolutely necessary. I can’t imagine Samsung currently enjoys a similar reputation.
Taken together, it’s hard to see the current upward trend of smartphone prices as sustainable. I simply don’t believe we’ll see “normal” (i.e., mainstream) phone prices continue to increase year over year anymore. Come 2021, I expect words like “humbled” and “value” will become tech announcement mainstays, rather than “power” or “pro.” And I do expect we’ll see actual backpedaling on prices as companies take a long, hard look at silly technologies like mobile mmWave and decide there’s no real benefit associated with that cost. Those same companies likely will see this as a hiccup, an anomaly that will rectify itself as we get back to “normal.” But as we’re so fond of saying, I think smartphones are about to enter a new “normal,” and one that ends the current chapter.